PREVENTION OF MONEY-LAUNDERING (TAKING POSSESSION OF ATTACHED OR FROZEN PROPERTIES CONFIRMED BY THE ADJUDICATING AUTHORITY) RULES, 2013 – AN OVERVIEW

[Mr. M. GOVINDARAJAN]

Section 73 of Prevention of Money Laundering Act, 2002 gives powers to the Central Government to make rules for the purposes of carrying out the provisions of the Act.  By virtue of this power under Section 73 (2)(ee) of the Act the Government made the Rules viz., ‘Prevention of Money laundering (Taking Possession of Attached or frozen properties confirmed by the Adjudicating Authority) Rules, 2013, with effect from 19.08.2013.

The Rules provides for taking possession of moveable properties and immovable properties.

Taking possession of movable property

Rule 4 provides for the taking possession of moveable properties.  Rule 4(1) provides that if the attached property is a moveable property the authorized officer shall take physical possession of such property and deposit it in a warehouse or a storage place.

Rule 4(2) provides that if the attached property is liable to speedy and natural decay or the expense of maintenance is likely to exceed its value, the authorized officer shall sell such property with the leave of the concerned Special Court or Adjudicating Authority and deposit the sale proceeds in the nearest Government Treasury or branch of SBI or its subsidiaries or in any nationalized bank in fixed deposit and retain the receipts thereof.   If the owner of the property furnishes the fixed deposit receipt of a nationalized bank equivalent to the value of the property in the name of ‘Director of Enforcement’, the authorized officer may accept and retain the same as security.   In this regard a report is to be sent to the Special Court or Adjudicating Authority for information and appropriate action.  If the moveable property is a conveyance the authorized officer after obtaining the valuation report from the Motor Licensing Authority may accept and retain the fixed deposit receipt and send a report to the Special Court or Adjudicating Authority.

Rule 4(3) provides that if the attached property is cash, Government or other securities or bullion or jewellery or other valuables the Authorized Officer shall cause to deposit in a locker in the name of the Director of Enforcement or in the form of fixed deposit receipt.

Rule 4(4) provides that the attached property is in the form of shares, debentures, units of mutual fund or instruments, the authorized officer shall cause to get such shares, debentures, units of Mutual Fund or instruments to be transferred in favor of the Director of Enforcement.

Rule 4(5) provides that the attached property is in the form of money lying in  a bank or a financial institution, the Authorized Officer shall issue a direction of the bank or financial institution to transfer and credit the money to the account of the Directorate of Enforcement.

Taking possession of immovable property

Rule 5(1) provides that the immovable property confirmed by the Adjudicating Authority is in the form of a land, building, house, flat etc., a notice shall be issued to the Registrar having jurisdiction of the area along with the provisional attachment order and order of the Adjudicating Authority confirming such attachment requiring the Registrar not to transfer or create any interest in such property until further orders and a copy of the order confirming the attachment shall be allowed at a conspicuous part of the property.

Rule 5(2) provides that if the immovable property is occupied by the owner, the authorized officer shall issue a notice of eviction of ten days so as to prevent to person from enjoying such property and after issuing of such notice if the premises is not vacated within the stipulated time, such occupant shall be evicted and the possession shall be taken by seeking the assistance of the local authorities in terms of Section 54 of the Act.

Rule 5(3) provides that if the immovable property is given on lease or rent to any third party which is registered under Section 17 of the Registration Act, 1908 the authorized officer shall issue a direction to the occupant to pay the lease amount or rent in the form of demand draft payable to the Directorate of Enforcement.

Rule 5(4) provides that if the immovable property is given on lease or rent to any third party where the registration is optional under Section 18 of the Registration Act, 1908, the authorized officer shall proceed to get the premises vacated and the possession shall be taken by seeking the assistance of the local authorities.

Rule 5(5) provides that if the immovable property is owned by joint ownership the authorized officer may accept the equivalent value of fixed deposit to the extent of the value of the share of the concerned person in the property estimated by the authorized officer to be involved in money laundering.

Rule 5(6) provides that if the immovable property is in the form of productive asset or an establishment which is producing goods of a factory etc., and where the manufacturing process or activity is being carried out, the authorized officer may take possession with a direction to the person-in-charge of concerned establishment or factory that gross income and any monetary benefits which accrue there from shall be deposited in the account of the Directorate of Enforcement.

Service of Notice

The authorized officer, according to Rule 6,  shall service a notice on all concerned parties-

• In Form I in case of immovable property;
• In Form II in case for taking possession of productive asset

And affix the same at conspicuous part of such property and shall also be served by publication in a local newspaper.

Property in the custody of court

If the confirmed attached property is in the custody of any court, Rule 7 provides that the authorized officer shall make an application to such court by providing a copy of the provisional attachment order with the prayer that such property and any interest or dividend payable thereon may be released in favor of the Directorate of Enforcement.

Property under hypothecation

If the confirmed attached property is hypothecated or mortgaged or pledged to any bank, financial institution etc., the authorized officer, as per Rule 8,  shall direct such bank, financial institution etc., that such property and any interest or dividend payable thereon shall be retained subject to further orders of the authorized officer.

Maintenance of Records

Rule 9 imposes an obligation on the authorized officer to maintain a register containing the details in Form III for recording entries in respect of movable property; Form IV for recording entries in respect of immovable properties.

Interpretation

Rule 10 provides that if any question arises relating to the interpretation of these rules, the matter shall be referred to the Central Government and the decision of the Central government shall be final.